Congress Moves to Ban Government Officials From Insider Trading in Online Prediction Markets

A House Democrat has introduced legislation that would bar government officials from placing bets on prediction platforms using nonpublic information.

Rep. Ritchie Torres, D-N.Y., is proposing the Public Integrity in Financial Prediction Markets Act of 2026, a three-page bill that would prohibit federal elected officials, political appointees, and bureaucrats from trading on such platforms with privileged information.

The proposal follows reports that traders on the prediction site Polymarket made significant profits betting on the downfall of former Venezuelan President Nicolas Maduro just before his extradition to the U.S. over the weekend. One bet placed Friday reportedly earned more than $400,000, raising concerns that insiders may have acted on nonpublic information ahead of the arrest.

While insider trading is already illegal in traditional financial markets and enforced by the Justice Department and Securities and Exchange Commission, prediction markets operate under a less regulated framework with minimal oversight.

Torres’ bill would prohibit government officials from using information not publicly available and deemed significant enough that a “reasonable investor” would consider it important when making a decision.

The legislation faces challenges. Congress has struggled in recent years to establish regulations for emerging sectors like cryptocurrency and artificial intelligence, and prediction markets may follow similar difficulties.

It remains unclear whether House Speaker Mike Johnson, R-La., will bring the bill to a vote or if President Donald Trump will sign it into law.

In response, Elisabeth Diana, a spokeswoman for prediction platform Kalshi, stated that her company is already regulated by the Commodity Futures Trading Commission and prohibits insider trading. “We already ban the activity it cites and support measures to prevent this type of activity,” Diana said, adding that the recent high-profile trading activity did not occur on Kalshi’s platform.